It’s hard to argue against a chief executive receiving a near fourfold increase in salary when he’s delivered share price growth of 220 per cent in the past year.

Through most of financial year 2009,
Sandfire Resources
struggled to make ends meet as an explorer capitalised at less than $10 million, and paid chief executive Karl Simich $180,000 for his services.

But last year, with the company transformed by the high-grade DeGrussa copper and gold discovery near Meekatharra in Western Australia and heading towards a $1 billion market value, Simich took home $661,403.

As one of the fastest growing stocks on the Australian Securities Exchange, Sandfire may be an extreme example. But in a broad sense, it is representative of a shift in executive remuneration trends in the resources industry in the past 12 months.

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After the global financial crisis drove many mining and oil and gas companies to freeze or cut the salaries of their top brass in financial year 2009, the swift recovery in commodity markets has seen purse strings loosen again.

The change has been particularly evident in the commodity sectors that have seen the greatest improvement in pricing – copper, gold and coal.

For example, Gary Stafford, chief executive of copper miner
PanAust
, received a total salary of $2.75 million last financial year, up from $1.54 million the previous year, after presiding over a share price increase of 42 per cent. In the same period, the spot price of copper on the London Metals Exchange increased by 27 per cent.

Similarly, the total salary of Geoff Davis, managing director of goldminer
Medusa Mining
, almost doubled to $684,127 after the share price growth well and truly outpaced the 32 per cent rise in the spot price of gold over the year. And
Riversdale Mining
chief executive Steve Mallyon’ s pay rose from $1.04 million to $2.08 million as the Africa-focused coal stock soared 102 per cent. While above-average share price growth is often the justification for salary increases of this scale, retaining key people is emerging as a major factor shaping remuneration strategies.

“You can’t turn the tap on and increase the supply of really good executives with the appropriate experience," Sandy Easterbrook, a consultant with proxy adviser CGI Glass Lewis, says. “So you would expect supply and demand to push the price on people’s skills up as much as anything else. One has to recognise the reality of that."

Avoiding the loss of key staff may have been part of the rationale applied by
Macarthur Coal
in awarding chief executive Nicole Hollows a big pay rise this year.

A review conducted by remuneration consultant Mercer concluded that while Hollows’ pay mix was in line with the market, her actual pay was below the 25th percentile of a peer group of similar-sized Australian mining companies.

As a result Macarthur raised her base salary to $1.1 million from April 1, helping to lift her total remuneration from $1.02 million in 2009 to $1.87 million.

At the time the increase in base salary kicked in, Macarthur was the subject of competing takeover proposals, which helped to inflate its share price.

But the stock has since slumped after both proposals failed and the company completed a capital raising to fund an acquisition.

Nevertheless, the company’s remuneration report was passed with minimal objection at its annual general meeting last month.

Macarthur has been in the S&P/ASX200 for the past five years. But for newcomers to the index, the added scrutiny on remuneration may surprise.

One that may soon need to adjust its practices is copper explorer CuDeco, which was admitted to the S&P/ASX200 in October last year.